Sebi cancels Sahara's mutual fund licence

In a fresh crackdown on Sahara, Securities and Exchange Board of India, on Tuesday, cancelled the registration of Sahara Mutual Fund saying it was no longer 'fit and proper' to carry out this business and ordered transfer of its operations to another fund house.

Sahara group has been engaged in a long-running regulatory and legal battle with Sebi ever since the regulator ordered refund of a massive amount of over Rs 24,000 crore (Rs 240 billion) by two Sahara entities. Recently, Sebi had also cancelled the Portfolio Management licence of a Sahara firm.

In the latest order, Sebi directed cancellation of Sahara Mutual Fund's certificate of registration on expiry of a six-month period from today.

Sebi also directed Sahara Mutual Fund and Sahara Asset Management Company to stop accepting subscription from its existing or new investors with immediate effect.

Besides, Sahara MF has been asked to "make efforts to transfer the activities of Sahara India Financial Corporation Limited (Sahara Sponsor) and Sahara Asset Management Company Private Limited (Sahara AMC) to a new Sponsor and a Sebi-approved Asset Management Company at the earliest."

Sahara MF's Board of Trustees have been asked to "oversee and ensure protection of the unit-holders' interests during the above period". The Board of Trustees would need to be re-constituted after the transfer, Sebi said.

If Sahara MF fails to complete the process of transition within five months, it would have to compulsorily redeem the units allotted to its investors and credit the respective funds to its investors, without any additional cost, within a period of 30 days thereafter and wind up the operations of the Mutual Fund.

In his 22-page order, Sebi's Whole-Time Member Prashant Saran said: "Having held Sahara India Financial Corporation Limited (Sahara Sponsor) and Sahara Asset Management Company Private Limited (Sahara AMC) are not 'fit and proper persons,' I find that they have failed to fulfil the eligibility criteria to remain as the Sponsor and Asset Management Company respectively."

As per the order, the various actions and proceedings against the group chief Subrata Roy, who is in jail for over a year now, and various other companies of Sahara Group results into Sahara AMC not being 'a fit and proper person' in accordance with the MF Regulations.